Theory question 106
Not-for-Profit OrganisationsThe summary of the Receipts and Payments of the Adamfo Social Club for the year ended 31st December 2019 is as follows:
Receipts ($): Subscriptions 4,000; Sale of competition tickets 800; Donations 300; Refund of rent 1,000
Payments ($): Rent 3,000; Honorarium to speaker 2,200; Secretarial expenses 200; Donations to charity 60; Competition prizes 600; Stationery and printing 320
Additional information (01/01/19 / 31/12/19, $): Equipment at valuation 1,950 / 1,500; Subscriptions: Arrears 120 / 170; Advance 30 / 60; Owing to suppliers of competition prizes 90 / 120; Stock of competition prizes 70 / 80
You are required to prepare for the club and for the year ended 31st December 2019:
(a) Subscriptions Account;
(b) Competition Prizes Suppliers Account;
(c) Competition Trading Account;
(d) Income and Expenditure Account.
Show the model answer
(a) Subscriptions Account ($): Dr Balance b/d (arrears) 120; Income and expenditure 4,020; Balance c/d (advance) 60 = 4,200 | Cr Balance b/d (advance) 30; Cash 4,000; Balance c/d (arrears) 170 = 4,200.
(b) Competition Prizes Suppliers Account: Dr Cash 600; Balance c/d 120 = 720 | Cr Balance b/d 90; Purchases (to competition trading) 630 = 720.
(c) Competition Trading Account: Sale of tickets 800; less cost of prizes (opening stock 70 + purchases 630 − closing stock 80) 620; profit 180.
(d) Income and Expenditure Account: Income – subscriptions 4,020; competition profit 180; donations 300 = 4,500. Expenditure – rent (3,000 − refund 1,000) 2,000; honorarium 2,200; secretarial 200; donations to charity 60; stationery and printing 320; depreciation of equipment (1,950 − 1,500) 450 = 5,230. Deficit (excess of expenditure over income) $730.
Find subscription income and prize purchases first; the refund of rent reduces the rent expense.